ALJDEC decisions subject to certification as final

2021A-04472-CHC-ROC · Registrar of Contractors · 2022-03-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Audrey Gilbreath,

COMPLAINANT,

v.

Tierra Bonita Construction LLC,

ROC License No. 324842,

RESPONDENT.

No. 2021A-04472-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 11, 2022 at 9:00 AM.

APPEARANCES: Audrey Gilbreath (“Complainant”) appeared on her own behalf. Alejandro “Alex” Martinez appeared on behalf of Tierra Bonita Construction LLC (“Respondent”). Steve Philpott appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Registrar.

FINDINGS OF FACT

Background and Procedure

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website. On June 19, 2019, the Registrar issued License No. 324842 General Residential B contracting license to Respondent. The license is currently active and renewed through June 310 2023. Jesus Chavez is the Qualifying Party/Member on this license, and Humberto Lopez and Alejandro Martinez are Members. Respondent’s address of record for the license is 4824 N. Stewart Rd., AZ 86314. Respondent has an active $9,000.00 surety bond on the licensed issued by RLI Insurance Company effective October 07, 2021. There is no prior discipline noted for the license, save one open complaint which is presumably related to this matter.

On or about December 11, 2020, Complainant and Respondent entered into a $25,700.00 contract to install an irrigation system at Complainant’s residence, including regrading for yard drainage, as well as a patio.

On or about September 13, 2021, the Registrar received a 32-item complaint from Complainant against Respondent’s License No. 324842 alleging poor workmanship and abandonment of their project. The Registrar designated it Complaint No. 2021-04472 and assigned to Steve Philpott (“Investigator Philpott”) for investigation.

On September 24, 2021, Investigator Philpott issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on October 12, 2021, at 2:00 p.m.

On October 08, 2021, Investigator Philpott issued a Notice of Rescheduled Jobsite Inspection Letter to the parties, advising that he would conduct an inspection of the project on October 19, 2021, at 10:00 a.m.

On October 19, 2021, Investigator Philpott conducted a review of the contract executed between the parties and inspected the work that had been performed on the project to date. He also took 52 photographs of the project site. When he was finished, Investigator Philpott drafted his Inspection Notes. Ultimately, Investigator Philpott substantiated 14 of Complainant’s 32 complaint items. Specifically, Investigator Philpott determined that complaint items 1, 3-4, 8, 13-15, 17, 19-20, 22, 26, and 29-30 failed to meet the Registrar’s minimum workmanship standards and required Respondent to perform corrective work to remediate the identified deficiencies.

On October 28, 2021, Investigator Philpott issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on November 19, 2021, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(22) and 32-1154(E).

Between November 08-11, 2021, the Registrar received additional documentation from Complainant some of the complaint items that were not substantiated by Investigator Philpott and identified for correction and/or completion by the Registrar’s Directive.

On November 19, 2021, the Registrar forwarded Complainant’s additional documentation to Respondent.

As a result, on October 28, 2021, Investigator Philpott issued an Amended Directive to Respondent because he substantiated some of Complainant’s additional workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on December 10, 2021, to notify the Registrar of its compliance with the Directive; to correct and/or complete substantiated complaint items 1-4, 8, 13-15, 17-22, 26, and 29-30, or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(22) and 32-1154(E).

On December 17, 2021, Investigator Philpott issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on December 20, 2021, at 1:00 p.m.

On December 17, 2021, Investigator Philpott issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant.

On December 17, 2021, Investigator Philpott issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1124(B) for failing to include its ROC License No. on its proposals and invoices.

On December 20, 2021, Investigator Philpott inspected the corrective work that had been performed on the project and took 5 photographs. When he was finished, Investigator Philpott drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Philpott determined that Respondent had satisfactorily remediated complaint item 26, but that Respondent had not performed corrective work necessary to remediate complaint items 1-4, 8, 13-15, 17-22, and 29-30.

On December 21, 2021, Investigator Philpott forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On December 28, 2021, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(12); 32-1124(B) and 32-1158, and 32-1154(A)(22). Respondent was given until January 12, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On January 10, 2021, the Registrar received Respondent’s Answer. In pertinent parts, Respondent noted that “I made a mistake and I dropped the ball on this construction project. I truly am sorry for the homeowner and I take full responsibility. I am making it right by taking the necessary actions and correcting the things that were done wrong. It [is] not my intention to leave a job like that.” [sic] Respondent informed the Registrar that, “This project will be done by tomorrow [January 11, 2022].”

On January 14, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 11, 2022. Per the February 07, 2022, Notice of Hearing the issues to be determined are whether the Registrar has cause to discipline Respondent’s license based on the following alleged statutory violations:

Charge 1: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108

Charge 2: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1124(B)

Charge 2: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158

Charge 4: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on her own behalf and called Investigator Philpott as a witness. Alejandro “Alex” Martinez testified on behalf of Respondent. The Registrar’s agency file was admitted into the record as its own exhibit. The substantive evidence of record is as follows:

Complainant owns residential property located at 9461 E. Towago Dr. Prescott Valley, AZ 86314.

Complainant tendered $21,800.00 to Respondent for the underlying project as follows:

On June 05, 2021, Complainant tendered Respondent a $7,900.00 check for the project.

On July 13, 2021, Complainant tendered Respondent a $8,900.00 check for the project.

On August 12, 2021, Complainant tendered Respondent a $5,000.00 check for the project.

From September 09, 2021, through October 08, 2021, Respondent’s license was suspended by the Registrar for lack of bond.

Respondent did not attend the October 19, 2021, jobsite inspection.

Respondent did not ask the Registrar or Complainant to extend the Amended Directive’s compliance deadline date, and understood that the project needed to be completed per contract by December 10, 2021.

On February 17, 2022, Investigator Philpott issued a Prehearing Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 10, 2022, at 10:00 a.m.

On March 10, 2022, Investigator Philpott inspected the corrective work that had been performed on the project. Ultimately, Investigator Philpott determined that Respondent had satisfactorily remediated complaint items 21 and 22, but that Respondent had not performed corrective work necessary to remediate complaint items 1-4, 8, 13-15, 17-20, and 29-30.

The parties were unable to settle their dispute prior to hearing.

In closing, Respondent argued that because its license had not been previously disciplined by the Registrar, that no discipline or light discipline should be issued in the matter.

Complainant declined to provide closing argument.

CONCLUSIONS OF LAW

The Registrar has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before OAH pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

The Registrar may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.

Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

Ariz. Rev. Stat. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.”

Ariz. Admin. Code R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Failure in any material respect to comply with this chapter.”

Ariz. Rev. Stat. § 32-1124(B) requires, in pertinent parts, that a licensee’s license number must be preceded by the acronym “ROC” and appear on all written bids and estimates submitted by the license holder.

Ariz. Rev. Stat. § 32-1158(A) provides that a contract between a contractor and property owner amounting to more than $1,000.00 must contain the following information in writing:

The name of the contractor and the contractor's business address and license number.

The name and mailing address of the owner and the jobsite address or legal description.

The date the parties entered into the contract.

The estimated date of completion of all work to be performed under the contract.

A description of the work to be performed under the contract.

The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor.

Ariz. Rev. Stat. § 32-1154(A)(22) provides, in pertinent part, that “[a] holder of a license may not fail to take appropriate corrective action to comply with this chapter or rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held. The Registrar has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.”

Ariz. Rev. Stat. § 32-1154(E) provides, in pertinent parts, that the Registrar may “[i]mpose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty.” It also provides that “[n]o future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.”

The material facts in the case at bar are not in dispute.

It is undisputed that the Complainant paid Respondent nearly 85% of the contract price for the underlying project. It is also undisputed that Respondent did not complete the project per the terms of its contract, and that most of the work Respondent performed did not satisfy the minimum standards set for workmanship by the Registrar. It is further undisputed that Respondent failed to timely and completely comply with the Registrar’s Amended Directive.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Directive and complete Complainants’ project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain his burden. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. Moreover, the record clearly reflects that Respondent did not refund any monies Complainant paid towards the completion of the underlying project.

Therefore, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(12); 32-1124(B) and 32-1158, and 32-1154(A)(22), Complainant has also established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent Tierra Bonita Construction LLC, ROC License No. 324842, be suspended for four (4) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22).

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $400.00 (four hundred) in certified funds as a civil penalty in this matter.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty (30) days following the effective date of the Registrar’s Final Order, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of that certification.

Done this day, March 31, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

By: Miranda Alvarez

Legal Secretary